Investment Column: Icap falter won't stop it being champion

Monitise; Telecom Plus


Our view: Buy

Share price: 482.1p (+1.4p)

A rarity from Icap yesterday: figures for the first quarter for once didn't really sparkle compared with the same period last year.

But let's be fair, back then the company, which facilitates the trading of a huge range of financial instruments between banks and other financial firms, benefited from a rash of market volatility caused by the "flash crash" back in May.

And this year there were an "unusual number of bank holidays" affecting the City of London – read, the Royal Wedding – further depressing revenues. So a 4 per cent fall is of little concern and in line with expectations. Activity has also picked up since the start of June and growth has returned. That can only continue.

As central banks' views on where interest rates should be diverge, Icap will benefit from the volatility and a pick-up in derivatives trading as banks try to call the market.

And although the prevailing push for regulatory change, including demands that trading in various financial instruments become more transparent, might look like a problem for inter-dealer brokers, such steps should actually benefit Icap by driving business through its doors. In fact, companies such as Icap are looking more and more like exchanges and there has been a flurry of consolidation activity in that sector.

Interestingly, it has yet to affect Icap's sub-sector. There are five main players, although Icap is the star. If there is a push to reduce that number, its power is such that it could sit back and watch while rivals get distracted by mergers, or it may simply gobble one or two up. The former is most likely, but Icap is fleet-footed enough to be opportunistic.

Given its quality, position and record, the 13 times forecast full-year earnings that its shares trade on is undemanding. Some analysts fancy smaller rival Tullett Prebon, trading on just eight times. But then, some pundits fancied David Haye to beat Wladimir Klitschko in their recent boxing match. We all know how that one turned out. In the end, class wins.

Telecom Plus

Our view: Buy

Share price: 37.5p (+3p)

Monitise is a leading player in the fast-growing world of mobile payments, with solutions that allow lenders and the like to offer their customers ways to bank on their mobile phones. And the growth in this market was reflected in the company's pre-close update, which was published yesterday. Annual revenues, Monitise said, were set to come in at around £14m, or more than double the amount reported last year. At the same time, it reported a "strong increase in operating profit and cash generation" over the second half of its financial year. Oh, and did we mention that the group is "well positioned to double revenue again" in the new financial year?

The company is clearly on the right track. The momentum is such that we would not be surprised if it keeps surpassing analysts' hopes. Before the bears grumble, we admit that it is easy to get carried away with technology. But we would add that, unlike some so-called "stars", Monitise actually is making money.

Telecom Plus

Our view: Buy

Share price: 681.5p (-17.5p)

Telecom Plus is a multi-utility reseller, providing gas, electricity, phone and broadband to residential and business customers. And, according to investors and analysts, it has been making a rather good job of it. The group announced its first-quarter numbers yesterday, revealing that it had experienced growth in customers, distributors and services. This came alongside strong cash generation, while management forecast a significant growth in profit-ability in the first half of the year.

In all, it added 7,388 new customers, bringing the total to 378,738. The number of services was up by 38,140. This gives the company good visibility on long-term profits.

Management expects organic growth to continue increasing over the coming months, driven by new distributors. The company is also investing heavily in overhauling its online operation. But while the performance has been impressive, so has the strength in its share price, up 47 per cent over the past six weeks.

Peel Hunt has the stock on a price of 20.8 times estimated full-year earnings, which is quite punchy, but, given the visibility on the road ahead, we believe there is more to come.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Arts and Entertainment
British musician Mark Ronson arrives for the UK premiere of the film 'Mortdecai'
music
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
Sport
footballBrighton vs Arsenal match report
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
people
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project
Diana Krall: The jazz singer on being friends with Elton John, outer space and skiing in Dubai

Diana Krall interview

The jazz singer on being friends with Elton John, outer space and skiing in Dubai
Pinstriped for action: A glimpse of what the very rich man will be wearing this winter

Pinstriped for action

A glimpse of what the very rich man will be wearing this winter
Russell T Davies & Ben Cook: 'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'

Russell T Davies & Ben Cook: How we met

'Our friendship flourished online. You can share some very revelatory moments at four in the morning…'
Bill Granger recipes: Our chef serves up his favourite Japanese dishes

Bill Granger's Japanese recipes

Stock up on mirin, soy and miso and you have the makings of everyday Japanese cuisine
Michael Calvin: How we need more Eric Cantonas to knock some sense into us

Michael Calvin's Last Word

How we need more Eric Cantonas to knock some sense into us